Precious Metal Bullion Markets Catch a Breath / Commodities / Gold & Silver 2020
Gold bugs may finally be taking their summer (stay)vacation. Aftermonths of frenetic activity in the bullion markets, physical buying and sellingslowed a bit last week.
Therespite, if it persists, could be welcome news for investors who have beenfrustrated by product scarcity and higher premiums.
TheCOVID-19-associated economic troubles have not been resolved, but those storiesaren’t commanding the level of attention they did in recent weeks.
Angryrioting and looting have slowed for the moment. The Fed is in between rate cutsand the next announcement of additional stimulus. And there is almost nobodyleft in Washington DC or the media willing to talk about multi-trillion-dollarannual deficits.
Theprice action in precious metals has also spent a few weeks range bound after adramatic surge in late July which captured the attention of speculators.
Ifthe lull in activity persists, it will be welcome for investors who have beenwaiting for a better opportunity to buy. Mints and refiners may catch up on someof the huge backlog, and dealer inventories and premiums could fall.
Whatisn’t certain is just how much of a breather the bullion markets will get, asthis fall promises to be eventful.
Thereturn of school and flu season could lead to a spike in COVID-19 andassociated economic carnage.
TheFederal Reserve meets again in September. Absent another correction in stockprices, the uber-bankers are expected to stay the course at zero interest ratesand massive bond purchases.
Thepattern, however, is set. Stock prices cannot maintain at these valuationswithout perpetual and ever greater Fed stimulus. The question is when will thelast injection of monetary fuel run out.
Weconsider it a matter of time before the FOMC makes the plunge into negativenominal interest rate territory or something equally extreme. Real interestrates are already well into negative territory.
The Presidential election will move markets. A Donald Trumpvictory will be a wild card. During his administration, bullion markets haveseen both extremes. A collapse in demand following his 2016 election and, morerecently, and massive surge of buying activity.
IfBiden wins, it is safe to say gold bugs will continue stocking up the metalsmarket and we should see millions of new entrants.
Eitherway, the election is more polarizing and divisive than any in recent memory.Violent rioting is likely to be back in the headlines, regardless of theoutcome.
Anymeaningful reduction in either spot prices or premiums should be viewed as anopportunity to buy the physical metal. But the paper priceof silver seems poised to continue moving higher regardless of any slackin the retail bullion markets.
By Clint Siegner
Clint Siegner is a Director at MoneyMetals Exchange,perhaps the nation's fastest-growing dealer of low-premium precious metalscoins, rounds, and bars. Siegner, a graduate of Linfield College in Oregon,puts his experience in business management along with his passion for personalliberty, limited government, and honest money into the development of MoneyMetals' brand and reach. This includes writing extensively on the bullionmarkets and their intersection with policy and world affairs.
© 2020 Clint Siegner - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.